Wednesday, January 23, 2013

Start Here if You are Looking for Angel Investors

If your startup is looking for an Angel investor, it makes sense to present your plan to flocks of Angels, and assume that at least one will swoop down and scoop you up. Or does it? Actually numbers and locations are just the beginning. The challenge is to find the right Angel for you, and for your situation. Here are some basic principles:

Angels invest in people, more often than they invest in ideas. That means they need to know you, or someone they trust who does know you (warm introduction). For credibility, they need to know you BEFORE you are asking for money.

Angel investors are people too. Investors expect you to understand their motivation, respect their time, and show your integrity in all actions. They probably won’t respond well to high pressure sales tactics, information overload, or bribes.

Angels like to “touch and feel” their investments, so they are generally only interested in local opportunities. It won’t help your case or your workload to do an email blast and follow-up with 250,000 members around the world.

But now to answer one of the most common questions I get “How do I find Angel investors?” With today’s access to the Internet, and Google searches, it really isn’t that hard. Here are the largest flocks:

Gust(formerly AngelSoft). This is perhaps the most widely-used source of information on Angel investor groups across the world, run by the “Father of Angel Investing in New York,” David Rose. This software platform is used by most local Angel organizations for managing deal flow.
It boasts more than 1,000 member-managed groups and VCs, with 40,000 investors, and over 1,800 startups funded in the last 12 months. As an entrepreneur, you simply use their investor search engine to find appropriate investors for your business according to location, industry interest and other relevant criteria.

AngelList. This is another very popular website for raising equity or debt investments for startups. It was founded back in 2010 by Naval Ravikant and Babak Nivi of Venture Hacks, which is also a great place to visit for startup advice. Although relatively new, they announced early last year that their community had already grown to more than 500 startups, and 2,500 investors. The format is more social networking in nature, and they also will soon provide a recruiting portal for crowdfunding with unaccredited investors, now that the US JOBS Act has been passed.

Keiretsu Forum. This one claims to be the world’s largest single Angel investor network, with 1,000 accredited investor members throughout twenty one chapters on three continents. Since its founding in 2000, its members have invested over $400 million in companies in technology, consumer products, healthcare/life sciences, real estate and other segments with high growth potential.
The Founding Chapter is in Silicon Valley, California, (naturally). A caveat is that this is a for-profit organization, so fees to present may be significant.

New England Investment Network. This is an online platform connecting entrepreneurs based in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, with Angel investors worldwide. The caveat here is that this network doesn’t have a personal touch, as it only facilitates the exchange of contact information, so the matchmaking is left up to you.
The reach is very broad, however, with 30 branches worldwide covering over 80 countries in Europe, North America, South America, Africa, Asia and Australasia, and over 200,000 members worldwide.

Angel Capital Association (ACA). ACA membership includes more than 160 angel groups and 20 affiliate organizations across North America. ACA member angel groups represent more than 7,000 accredited investors and are funding approximately 800 new companies each year and managing an ongoing portfolio of more than 5,000 companies throughout North America.

Of course, there are many Angel investors, often called “super Angels,” that have a large following and large reach, so they don’t need any of these organizations to be found. Examples of some leaders in this space include Ron Conway, Mike Maples, Jr., and Dave McClure. Connecting with one of these would be a real coup for your startup.

My real message is that the best Angel you can find is a local high net-worth individual, with whom you or your advisors have an established prior relationship. So get out there and network today, and you can be one of the lucky ones who is touched by an Angel without having to go through hell first.